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Morning Briefing Strap Line
Wed 4th Apr 2012 - Burger King, Spirit and Harvey’s

Story of the day:

Batchelor - Domino’s Pizza has “limited competition”: Domino’s Pizza chief executive Lance Batchelor has claimed there is limited competition for the company in the UK market. He pointed out that Pizza Hut had reduced store numbers by 16 last year to 288 as did Perfect Pizza, down 20 sites to 90. Only Papa John’s among the major competitors had increased its footprint, up 31 to 183. He told a sector conference: “I’m not here to knock competition but you need to see us in context. Yum Brands has decided to exit the UK market and been closing stores.” He also reported that 133 UK sites now had a turnover in excess of £1m per annum, up from 115 the year before. The company had also rolled “global best practice store design” at 50 sites – customers are closer to the dough-stretching to create “fantastic in-store theatre”. Franchisees Ebitda rose to an average of £106,380 last year, up from £105,276 the year before. “With the average franchisee operating six stores, that’s around £500,000 a year – these are strong, sophisticated business people,” he added. Analyst Simon French, of Panmure Gordon, recently issued a note on Domino’s in which he said: “We think the competition could increase with the refranchising of the entire Pizza Hut UK estate, which includes plans to double the size of the delivery business to 640 units.”

Industry news:

Cider best-performing category in UK on-trade: Cider was the only product to increase in volume and value within the UK on-trade universe of 127,151 outlets in the most recent year, according to figures produced by on-trade information specialist CGA. The category rose by 0.7 per cent in volume terms and 8.4 per cent in value. The next best-performing category is spirits, which dropped in volume terms by 1.9 per cent but jumped in value terms by 6.2 per cent. Beer dropped by 3.8 per cent in value terms but rose in value by 2.2 per cent. Soft drinks declined in volume by 3.4 per cent and 0.2 per cent in value. Wine dropped in volume by 6.1 per cent but rose by 5.7 per cent in value. Overall, the on-trade drinks market dropped in volume by 3.4 but was worth 3.3 per cent more in value terms. CGA chief operating officer Phil Tate told Morning Briefing: “Flavour extensions in fruit and the cross demographic appeal of the category has seen cider benefit. “The continued consumer trend towards using the on trade for the treat occasion was seen value outstrip volume in multiple categories (even with duty and VAT). “This is led by customers deciding to drink less but rewarding themselves with premium products.”

US value offers dip in March: After increasing emphasis on value promotions for the last several months, casual-dining restaurants either maintained or cut back on promoting lower-priced menu items in March, according to the latest Monthly Menu Check from Brad Ludington, an analyst from KeyBanc Capital Markets. He said: “It will be interesting to see whether restaurants actually see higher average checks that allow them to consider rolling back value promotions in the coming months.”

Britons get by on two meals a day: A survey of 2,000 adults has shown that most Britons now get by on two meals a day. More than half often skip breakfast and “make it through to lunch”. One in ten adults say they swap dinner for alcohol when they are going out for an evening and forget about food until the next day.

Pepsi makes top ten UK brands: Pepsi has made it into a list of the UK’s top ten selling brands although Coca Cola still tops the list. Sales of £1.1bn put Coke first in the list with Warburtons in second place and Walkers Crisps in fourth. Pepsi took the tenth position in the list with sales up ten per cent to £329m.

Dentists urged to ask about drinking habits: A paper in the Royal College of Surgeons’ Dental Journal proposes that dentists should ask patients about their drinking habits. The paper argues that patients tend to see their dentist more regularly than their doctor.

Molson Coors buys StarBev: Molson Coors has acquired StarBev for £2.21bn. StarBev, which brews Staropramen, was put up for sale by private equity group CVC Capital Partners after several informal approaches to buy the business. Asahi of Japan had been tipped as favourite to buy StarBev. Molson Coors chief executive Peter Swinburn suggested the deal would provide a foundation to extend key brands such as Carling into Europe.

Sainsbury’s reprimanded over “feed a family for £50” ad: Supermarket Sainsbury’s has been ordered not to repeat an advert that claimed a family of four could buy three meals a day over a week from the store for £50. Customers complained that the meal plan did not include enough calories or “store cupboard” ingredients that had to be bought separately.

Company news:

Prezzo plans 20 Chimichanga restaurants: The 184-strong Italian chain Prezzo is hoping to operate 20 Chimichangas Tex-Mex restaurants after two more successful openings in 2011. For the 52 weeks ended 1 January 2012, revenues increased 18 per cent to £123.9m and gross increased 15 per cent to £18.7m. The company opened 27 new restaurants, acquired nine restaurants and closed two restaurants during the period. Openings this year are planned for Bath, Bristol and Cobham.

Town and Country Inns opens fourteenth site: A 22-year-old businessman has built a 14-strong pub company in just two years after switching to the on-trade after starting his business career as Bargain Booze’s youngest franchisee at the age of 18. Ross Wallis, the founder of Town and Country Inns Management Solutions, has just opened his fourteenth pub after founding the company in 2010. His latest venue is Punch Taverns’ Tithebarn in Preston’s Lord Street. Gavin Williams business development manager at the firm, said: “We have had quite a few success stories from Punch pubs. “We are quite an innovative company and we tailor to whatever a pub needs. “The idea for The Tithebarn is that it is a community local, so we will be serving good beer at good prices.” Town & Country’s fifteenth opening will be its fourth Punch site - the Fenwick Country Pub & Dining venue in Claughton, Lancashire. The pub featured on Gordon Ramsay’s Kitchen Nightmares a few years ago – it’s where Ramsay launched his “Campaign for Real Gravy”. Wallis also runs a couple of estate agency sites and a couple of gift and card shops. Town & Country operates three trading templates: a wet-led concept, a value offer and a community local offering. He told Morning Briefing: “We are trading profitably although it’s not easy - you need to be pro-active and very innovative.” Wallis has also set up a second company, a temporary management company called Town & Country Management Solutions. Its other pub sites include the Eagle & Child in Garstang and The Farmers Arms in Great Eccleston, both Lancashire. 

Burger King in radical menu evolution: Burger King in the US has introduced the biggest menu expansion in the chain’s 58-year history. Ten new items have been added to the menu at Burger King’s 7,200 locations across the States, including new premium Garden Fresh salads, snack wrap sandwiches, fruit smoothies, chicken strips and frappe drinks. Steve Wiborg, executive vice president of Burger King Corp, said: “(Consumers said) they wanted more choices, like they could get at our competition — whether that was Starbucks or McDonald’s or anybody else — and those had to be best in class.” Wiborg said Burger King’s new additions stand out from the crowd because they are freshly made. The new smoothies, including the options of mango or strawberry-banana, are hand-blended to order.

Australian takes over Hall & Woodhouse pub: Australian Andrew Crompon, who has worked at the Michelin-starred South Lodge Hotel, has taken over The Olive Branch pub in Horsham, a Hall & Woodhouse venue. Head chef is Andy Collard, who has also worked at South Lodge. He said: “I want to showcase what Sussex has.”

Spirit hits 61 per cent food sales at two brands: Spirit, the managed and leased operator led by Mike Tye, has reported that food accounts for 61 per cent of turnover at two of its six drive brands – and drives 85 per cent of total site income. The first brand, Chef & Brewer, now at 138 sites, serves an average of 1,000 covers a week with an average spend-per-head of £11.30 including VAT while the second brand, Fayre & Square serves 1,600 covers a week at an average spend-per-head of £7 including VAT. Flaming Grill now has a 50 per cent food mix “and growing” with 1,000 covers a week and average food spend-per-head of £8.15. Food mix at Original Pub Company venues is 16 per cent with 300 covers a week and an average spend of £6.40, with food mix at John Barras sites now 22 per cent with an average of 500 covers a week and spend-per-head of £6. Taylor Walker sites have a food mix of 27 per cent with average covers of 500 a week and spend-per-head of £10.40 including VAT.

Enterprise Inns sells four Tesco convenience stores at auction: Enterprise Inns has sold four pubs let to Tesco for use as convenience stores at an Allsops auction raising £3,080,000.The company sold the former Forester Arms in Wakefield for £650,000 (rent of £45,000 per annum), the former Turnpike in Newcastle upon Tyne for £590,000 (rent of £44,000 per annum), the former Green Dragon in Waterlooville, Hampshire for £740,000 (rent of £50,000 per annum) and the former Fox and Pheasant in West Drayton, Middlesex for £1,110,000 (rent of £69,000 per annum). Last week, chief executive Ted Tuppen told Morning Briefing that the properties were not considered part of the “core business” because Enterprise merely acted as property landlord.

Barburrito to target London: Mexican food chain Barburrito has secured £3.25m of funding to expand. Morgan Davies and Paul Kilpatrick set up the chain by the launching the UK’s first burrito bar in Manchester’s Piccadilly Gardens in 2005 and have since added three others in the city – one on Deansgate and two at The Trafford Centre - as well as outlets in Leeds and Liverpool. They plan to use the investment to triple the number of stores over the next four years, starting with a series of openings in London. Kilpatrick said: “We have a proven concept, an excellent product and a strong brand. BGF’s capital will help support our expansion into London and the rest of the UK.” Barburrito currently employs 100 staff and turns over £4m.

Pret A Manger plans 44 openings this year: Sandwich maker Pret A Manger is to open 44 new stores in the UK this year. Pret said sales rose 15 per cent to £377 million in the year to 29 December 2011 while underlying profits were up 14 per cent to £52.4m, with 24 store openings. It opened its first two branches in France earlier this year, which it said were going well. The company also revealed that the proportion of UK staff across the company is just 18 per cent.

McGowans set to add two sites: McGowans, the north London-based operator of Irish theme bars, is set to add two more outlets. Owner John McGowan told Morning Briefing that completion on the deal is “imminent”, which will bring the company’s estate to 18. Both sites are former Lloyds Bank buildings and are being acquired on a freehold basis - one is in Luton and the other on Bedford High Street. The outlet in Bedford is up against competition from traditional pubs, music-driven pubs and late-night venues, but McGowan said: “There are no other Irish theme bars.” McGowan set up the company 1986 - its estate is centred on north London with a few outlets in Hertfordshire and now Bedfordshire.

Fat Cat Group celebrates two decades in business: High street operator Fat Cat Group is celebrating two decades in business this year. The company, led by Matt Saunders and James Patterson, opened its first venue in Bangor way back in January 1992. The company, which sold Bluu to Marston’s few years back, has spent the past few year re-investing in its sites. Said Saunders: “The pub industry has undergone radical changes over the years and it has been independent operators such as ourselves that have been at the forefront of this change, constantly innovating in order to satisfy increasingly sophisticated customer demands for food and drink and the atmosphere in which to enjoy it.” The company is offering customers the chance to win a top prize each month this year to celebrate.

02 to replace The Cloud as McDonald’s free Wi-Fi provider: 02 is to replace The Cloud as the provider of free Wi-Fi at McDonald’s 1,200 UK restaurants. The firm said that the switch over will take place in time for ‘this summer’s festivities’ including the Olympics and the Queen’s diamond jubilee. Access to the Wi-Fi hotspots will be free to McDonald’s customers whether they are an O2 customer or not.

Head of Steam marks Titanic anniversary with 18 brews: Head of Steam, the north-east multiple headed by Tony Brookes, will mark the centenary of the sinking of the Titanic with a range of beer brewed by Titanic Brewery. Customers will be given a collector card, designed to look like the boarding cards used on the trip, with all the beers listed on the back. Beers to chose from include Maiden Voyage, All Aboard, Full Steam Ahead, Iceberg and Nine Tenths Below. Customers who sample 12 of the different beers will get a special Titanic polo shirt, while those sampling a pint of all of the 18 beers will get the polo shirt, a Titanic glass and a bottle of a special nineteenth beer, Pier 54. The beer is named after the dock where the Carpathia - the ship that picked up many of the survivors - landed in New York the day after the disaster.

Jamie Oliver opens Chiswick Union Jacks: Celebrity chef Jamie Oliver opened a Union Jacks venue on Monday is Chiswick. The concept has an emphasis on flat-breads and wood-fired cooking, marrying the best of British produce of meats, fish, and cheeses from artisan producers to the organic dough-making pioneered by Jamie’s partner, New Yorker Chris Bianco. The restaurant is situated on the former Villandry premises on the High Road.

New fast casual concept opens in Beckenham: Enterpreneur Reif Remzi, son of Miso founder Olgun Remzi, is to open a new fast-casual concept Branded: Steak and Burger this month in the former Gourmet Burger Kitchen (GBK) site on Beckenham High Street. Remzi has acquired the leasehold interest of the ground floor unit on a rent of £62,000 per annum – agent was Davis Coffer Lyons. A Miso venue already operates nearby on Beckenham High Street, as well as in Bromley, Islington, and two in Croydon. Its newest site in Richmond will open in April 2012.

Harvey’s reports small profit decline: Lewes-based brewer and retailer Harvey’s has reported a five per cent decline in profit on static turnover for the year to 31 December 2011. The company stated in its Companies House filing: “There has been a further decline in own beer volumes during 2011, following on from the reduction in the previous year. “However, turnover has been maintained overall and although gross profit margins have been reduced from 42.54 per cent to 40.76 per cent, operating profits have only gone down from 12.75 per cent to 12.18 per cent.” Excluding income from the sale of assets, net profit for 2011 was £1,830,224 compared to £1,935,599 in the previous year. Turnover was £19,316,471 compared to £19,173,739 in 2010.

Hakkasan opens in New York: Hakkasan, the restaurant that was founded in London's Hanway Place, has opened its seventh site - a 200 cover restaurant in New York. Niall Howard, chief executive of Hakkasan, said: "Following the success of our most recent locations in Abu Dhabi and Dubai, we are proud to open the doors of the Hakkasan New York."

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